Ok, so we've talked about your income, now let's get to the Itemized Deductions.
Medical and Dental Expenses - Most tax payers do not have enough medical expenses to take the medical deduction so I hate to see you put a lot of work into it for no reason. Only the medical expenses in excess of 7.5% are deductible. For those of you that percentages are not your strong suit, that means if you have income of $100,000, only the medical expenses in excess of $7,500 or if $75,000 of income only the amount over $5,625 qualify. Now health insurance premiums count, but usually if you receive your health insurance through work they have already reduced your taxable income on your W-2 as part of a section 125 or health savings plan. Almost any medical, dental or eye care expenses qualify including mileage (19 cents per mile the first half of the year and 23.5 cents the second half). Sorry, those frugal Congressmen continue to not allow a tax deduction for face lifts, liposuction, teeth whitening, and breast augmentations.
Taxes You Paid - Real estate taxes, state income taxes, and excise taxes paid to the town on vehicles, boats, etc. qualify. If you pay real estate taxes to your mortgage company, the real estate tax totals will be part of your 1098, but if not, you will need to provide the amounts to your tax preparer. Your state withholding will be on your W-2. The amount paid to the town for registration can be found in your checkbook or on your registrations. Sales tax on a new motor vehicle may also be deductible.
Interest You Paid - Unless you are using private financing, your home mortgage interest, points, equity line interest should all be on the 1098 received from your mortgage company. If you purchased a house during the year, it's a good idea to provide the first two pages of your closing statement often called the HUD statement to your preparer to see if there are points on the purchase that can be used as a deduction.
Gifts to Charity - Charitable Gifts are reported in two categories. One is by gifts by cash or check and the other is by anything other than by cash or check or as I like to call it "stuff". Any donation of stuff worth more than $250 must include the name and address of the organization, date and location of the contribution and a description of the "stuff". If it's over $500, the date acquired and purchase price must be included. A couple of years ago the IRS started requiring Appraisals on all car donations with a value of more than $500. This slowed the donation of vehicles to a trickle, in fact I haven't seen one car donation in the last couple of years. Mileage for charity is 14 cents per mile.
Casualty and Theft Losses - I'm not even going to get into this one. In my 20 years of tax preparation, try as I might, I've never seen anyone that qualified for this deduction. If you think you may qualify, please talk to your tax preparer before you put any work into getting information together for it.
Job Expenses and Certain Miscellaneous Deductions - This is another area where most people don't qualify for the deduction. Only expenses over 2% of your income qualify so for you that are challenged by percentages it's anything over $2,000 on a $100,000 income that qualifies or anything over $1,500 on $75,000 of income that qualifies. The two big items here are unreimbursed employee expenses or work-related education costs and gambling expenses. The gambling expenses have a couple of unusual characteristics. First of all, they are not subject to the 2% floor and second, gambling losses in excess of gambling expenses are nondeductible.
Hope this helps guide you, and eases the pain of gathering your tax information. This should cover most items unless you own a business or rental property, which puts you in a whole different tax gathering stratosphere. But, please feel free to post your questions regarding those.
In any case, a little of your favorite music while gathering all the information makes it much more enjoyable. My pick, of course, is blues!
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